We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
28 October 2010
Section 328 of the Proceeds of Crime Act 2002 provides that it is an offence for a person to be involved in an arrangement that he or she knows or suspects will facilitate the acquisition, retention, use or control of criminal property by or on behalf of another person. Mediators and other members of the legal profession have previously questioned whether Section 328 could apply to legal professionals involved in mediation where the settlement falls foul of the act.
In 2003 the High Court found that the act's requirements trumped legal professional privilege during litigation.(1) However, the Court of Appeal overruled this finding in 2005 in Bowman v Fels,(2) holding that Section 328 was not intended to affect the ordinary conduct of litigation by legal professionals. The court found that this applied to any step in the litigation, including agreements between the parties to dispose of the legal proceedings in whole or in part. Moreover, the court found that even if Section 328 applied to the normal conduct of litigation, it would not override legal professional privilege.
Following the ruling in Bowman, the Chartered Institute of Arbitrators published guidance on the act's effect on mediators, arbitrators and adjudicators.(3) In June 2010 the Civil Mediation Council published a guidance note entitled "The obligations of mediators under the Proceeds of Crime Act 2002".
The council's guidance note emphasises the need for all training providers, mediation providers and individual mediators to study the Chartered Institute of Arbitrators' guidance carefully in order to ensure that mediators do not risk incurring criminal liability under the act. In particular, they draw attention to two situations. The first arises where there are no existing or contemplated proceedings or where the link between mediation and proceedings is tenuous. The second arises where proceedings exist, but a settlement does not reflect the parties' respective positions in the proceedings and is known or suspected to be no more than a pretext for agreeing on the acquisition, retention, use or control of criminal property. The guidance indicates that in such cases it may be necessary for the mediator to withdraw from the mediation or make a report under the act, or both.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.